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October 10, 2012

Jack Welch Slams Critics, Defends Twitter Comments About Jobs Numbers

Three major economic indicators just don’t add up, Welch argues

Management guru and former General Electric CEO Jack Welch responded to the firestorm of controversy created by his tweet in response to the latest employment figures released Friday.

Welch, who suggested President Barack Obama’s campaign, or “Chicago guys” as he referred to them in the tweet, had somehow manipulated the numbers to favor its re-election efforts, drew sharp criticism from economic observers on both the left and the right.

While Welch (left) conceded his tweet was controversial and, given the chance, he might have worded it differently, he nonetheless defended its substance in a Wall Street Journalop-ed on Wednesday.

Comparing the intensity of his critics to those found in Soviet Russia and Communist China, Welch began by downplaying his original comments, writing that he simply suggested “that a certain government datum (like the September unemployment rate of 7.8%) doesn't make sense” and is “downright implausible.”

He countered that reports of his affiliation with the Romney campaign are wrong, and while his wife did work for Bain in the late 1980s, it was Bain Consulting and not Bain Capital, and she “had no contact with Mr. Romney.”

“The Obama campaign and its supporters, including bigwigs like David Axelrod and Robert Gibbs, along with several cable TV anchors, would like you to believe that BLS data are handled like the gold in Fort Knox, with gun-carrying guards watching their every move, and highly trained, white-gloved super-agents counting and recounting hourly. Let's get real.”

The unemployment data reported each month are gathered over a one-week period by census workers, he explained. Some questions allow for “unambiguous answers, but others less so.”

“For instance, the range for part-time work falls between one hour and 34 hours a week. So, if an out-of-work accountant tells a census worker, "I got one baby-sitting job this week just to cover my kid's bus fare, but I haven't been able to find anything else," that could be recorded as being employed part-time.”

He claimed the possibility of "subjectivity creeping into the process is so pervasive" that the BLS' own "Handbook of Methods" has a full page explaining the limitations of its data.

“Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is–well, let's just say, overstated,” Welch states.

He then pointed to three statistics he says don’t add up–the labor-force participation rate, the growth in government workers, and overall job growth. That all of them achieved multi-decade records over the past two months has to raise some eyebrows, Welch argued.

“There were no economists, liberal or conservative, predicting that unemployment in September would drop below 8%.”

He’s noted he’s not the first person to question the accuracy of the Labor Department’s figures, and pointed to Austan Goolsbee, former chairman of the Obama administration's Council of Economic Advisers, and “one of my chief critics in this go-round." Back in 2003, Goolsbee, commenting on a Bush-era unemployment figure, wrote in a New York Times op-ed: "the government has cooked the books," though Goolsbee was not directly accusing the Bush administration in the same way Welch did of the Obama administration.

Employment numbers are regularly spun for political gain upon their release, and additional confusion can occur due to the fact that certain private organizations’ including ADP and TrimTabs, release their own high-profile numbers just prior to the government. The organizations’ findings often differ, sometimes heavily, from what the government eventually reports, though Welch is one of the first high-profile business executives to accuse an administration of purposefully changing the numbers.

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